CEO Message

2017 was a remarkable year for Hattha Kasekar Limited with a well-managed and competitive performance result in loan (both quantity and quality), deposit and other financial services initiatives. HKL has achieved significant milestones in intensive product development, risk management, compliance, collection, business development and staff capacity building, despite strong competitive environment and prudential regulatory requirements. HKL is proud to mark the first anniversary of HKL-Krungsri integration, “Stronger Together” with this achievement.

Economic Development

Cambodia has sustained an economic growth rate of 7% in 2017, mainly supported by the sectorial contribution in services (39%), followed by industry (30%) and the agriculture sector (25%), according to MoEF, and backed by the robust performance in the construction (18%), textile (7%), and tourism sectors (5%), despite the number of challenges in the moderate growth of global and regional trade partners like the EU, the US and China, according to NBC.

Industry Environment

The microfinance sector in Cambodia is highly competitive due to the fast-growing number of new entrants, currently with more than 50 banks and 70 MFIs, as well as the strong growth rate of bank lending with no less than 20% growth in the sector. The prudential regulations have strengthened the financial institutions’ capacity to another secured and sustainable level and ensured the industry’s sustainable growth. Financial Institutions’ assets have grown by 20.2%; while the amount of loans and deposits has grown by 18% and 24.5% respectively in 2017. HKL has caught up with the industry growth, maintaining its loan growth rate at 30% in 2017.

Despite the strong competitive environment, HKL has managed to rank in top position, 3rd in loan outstanding, 2nd in deposit, and 2nd in the numbers of ATM machines deployed.

Performance Achievement

HKL has achieved a Net Profit after Tax of USD 15.4 Million, close to the annual profit goal, with the income hitting 92% of the target; and operational expenses were kept 23% lower than planned.

Lending amounts grew by 30% to USD 567.5 Million from USD 445 Million in 2016.

The non-performing loan ratio has increased compared to 2016 but was still manageable at 1.1% in 2017.

Net interest income rose by 23% to USD 56.44 Million from USD 46.07 Million, resulting from the higher loan volumes in 2017.

Operating expenses rose only by 8.21 % to USD 31 Million which were well managed.

Social Responsibilities, Customers’ Satisfaction and Client’s Protection HKL has maintained its strong interest in corporate social responsibility, having supported the related educational activities program, environment and people’s health & safety, and ensuring HKL’s clients has produced no harm to the environment and society. HKL continues to improve the service quality. On annual basis, clients’ survey feedback has been collected and reviewed for service improvement to meet the customers’ needs. A few campaigns were initiated to offer special prices to loyal customers and to incentivize members who referred clients to HKL. HKL also set up a tele-Sale team to communicate with depositors to fit the specific need of each customer group.

Offices and ATMs network of HKL

In 2017, HKL’s office network grew to 168 offices from 153 offices in 2016 and to 126 ATM machines, bringing our financial services closer to the population and substantially increasing our catchment area and increasing the access of customers to the services with no limit of time and day.

Industry Prospects

The Cambodia economic growth is forecasted to remain strong at around 7% in 2018, supported by the growth in industry of 8.6%, service of 7.6% and agriculture of 2%, and by stronger growth of non-garment exports, in wholesale & retail trade, and in crops; and with shared contribution from the garment, construction, real estate, transportation, hotel and restaurant sectors, according to a report of the NBC. The service and industry sectors remain the largest contributors to Cambodia’s economy. With the remarkable growth pace, the loan and the deposit growth in the Financial Industry in 2018 is projected to grow at similar pace to 2017 at a rate of 18% and 24% respectively.

Strategic Plan & Priority

HKL has developed a Mid Term Business Plan for 3 years, aspiring to become the most admired MDI and to be well-prepared for Commercial Banking by 2020, embarking on the journey of best customer experiences, platforms development to achieve sustainable growth & banking standards, and digital technology advancement to improve product offering and internal efficiency.

Acknowledgement

We are profoundly grateful for the dedication of HKL’s team for their contributions and commitment to the sustainable growth of HKL. The trust of our customers, partners and associates and the support of the National Bank of Cambodia and other regulatory bodies have made our achievement recorded. My heartfelt thanks to our chairman, board members and shareholders for their guidance and support, and for entrusting me to continue to lead HKL.